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  1. #1
    Specialist Member RCox's Avatar

    Long Term Buying Opportunity Seen in US Dollar !!!

    Long Term Buying Opportunity Seen in US Dollar

    This section is generally devoted to short term trades but there are some very important moves being seen now in the US Dollar and this recent weakness sets up some strong long-term buys for traders willing to enter into contrarian positions and accept some added volatility. This is generally what I find to be ideal trading conditions, with extreme moves being seen. So while finding an exact bottom is a difficult (or even impossible task) those with patience should be rewarded if willing to take contrarian bull positions.

    From a fundamental perspective, the US Dollar should continue to benefit from its unique position in the major economies, as the Federal Reserve is starting to indicate willingness to end its quantitative easing program. This is not what is being seen in Japan or in the Eurozone, where stimulus is set to continue for the foreseeable future. Market reactions in the last two weeks are not inline with these trends, as traders are responding to changes in short term expectations. Specifically, the Bank of Japan did not signal extended maturities for bond loans, and the ECB did not signal the use of negative interest rates. These options are still on the table, however, and since this is a near impossibility in the US, the latest downside moves in the Dollar signal buy entries.

    Technical Analysis:

    The technical perspective supports this, with the EUR/USD now coming into the 61.8% Fib retracement of the drop from 1.37. While this does not signal an immediate or outright reversal, it does show that the latest rally is over-extended and ripe for reversal.

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    In the USD/JPY prices are seeing major downside moves but we are now coming into the 61.8% Fib retracement of the move from 90.90.

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    The USD/CHF is coming into major historical support at 0.92.

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    The AUD/USD has posted new lows for the year but is not coming into the 61.8% Fib retracement of the rally from 2010.

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    So while this does not signal an immediate rally in the US Dollar, it should signal caution for those betting against the currency. At current levels, I am starting to build bullish positions in the US Dollar, focusing particularly on the USD/JPY and USD/CHF. I am also buying into the declines in AUD/JPY, looking for a long term rise back into the upper 90s.

  2. #2
    Legendry Member Michael Hodges's Avatar
    I had/have a similar view on the EUR and the JPY versus the dollar. Long term charts are shaping up for a bounce and retest of higher prices....

  3. #3
    Specialist Member RCox's Avatar
    OK, and this is/was a boring response to the argument.

    Goodbye to the forums.

  4. #4
    Legendry Member Michael Hodges's Avatar
    The USD/JPY has retreated below the 95 level, Abe's original target for yen valuation. This is a good place to start looking for longer term support to come back into the trade. A sustained drop below here could result in much higher yen prices versus the dollar. ....oh, and you are boring.....

  5. #5
    Veteran Member hchandra's Avatar
    Personally I think waiting for dollar index bounce would rewarding especially with all good news in USA,
    all of them pointing to possibility fed will end its bond purchasing program,
    In Europe and Japan, I think their problem won't be solved in near term and agreed further stimulus will come while fed ending their stimulus.

    I Think it would not complete without US dollar index chart,
    Click image for larger version. 

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    I have placed demand area in the chart and currently watching if the demand area broken or not, while placing short in EUR/USD now.
    yellow line in the chart will be my major level to place long for US dollar.

  6. #6
    Veteran Member Ammeo's Avatar
    Quote Originally Posted by Michael Hodges View Post
    The USD/JPY has retreated below the 95 level, Abe's original target for yen valuation. This is a good place to start looking for longer term support to come back into the trade. A sustained drop below here could result in much higher yen prices versus the dollar. ....oh, and you are boring.....
    USD/JPY already seems undervalued. Lemme gear up myself for some USD shopping..xD

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